Even the most diligent and conscientious among us deal with debt issues at some point in our lives. Whether it’s an unexpected hospital stay, a car accident, or a dental bill, all it takes is one significant event to find yourself underwater on bill payments. However, even when charged with legitimate debts, debtors still have rights. Are you coping with constant calls from creditors? Daniel Ciment, a recognized bankruptcy, debt collection defense, consumer protection attorney, and founder of Ciment Law Firm, PLLC, in Katy, TX, shares some crucial information in this blog, including two recent Seventh Circuit Court decisions involving the Fair Debt Collection Practices Act (FDCPA).
Texas Law and Creditors
When dealing with debt, remember that state and federal laws protect you. According to the Texas Debt Collection Act, creditors cannot engage in several practices. When communicating with debtors, debt collectors must NOT:
- Use obscene or profane language
- Threaten you with criminal acts or violence
- Falsely accuse you, the consumer, of a crime or committing fraud
- Harass you with anonymous or continuous calls
- Placing a collect call to the debtor but refuse to disclose their company name before the recipient accepts the charges
The law also forbids fraudulent collection tactics, including:
- Misrepresenting the total amount of the debt
- Using false identification and a false name
- Failing to disclose the name of the company that owns the debt
- Sending documents that falsely claim to be from an official government agency or court
- Attempting to collect more than the amount the debtor indeed owes
Let Daniel Ciment and the legal team at Ciment Law Firm, PLLC, help you at any point in the process. Give them a call at 281-937-3949 to schedule your free consultation.
Understanding the Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act is the federal version of consumers’ rights. It limits the activities of third-party debt collectors when collecting a debt and restricts the time of day and number of times they can contact a debtor. Any debtor harassed by a debt collector can sue them in federal or state court and potentially recover legal fees or damages. Are you wondering if this is a viable option for you? Contact the experienced debt collection attorneys at Ciment Law Firm, PLLC, at 281-937-3949.
Common Scare Tactics Debt Collectors Employ
Relying on most consumers’ lack of knowledge about their rights, debt collectors often employ legal and illegal scare tactics. Even when your debt is legitimate, knowing your rights can help you respond to an overly aggressive debt collector that has broken the law. Remember, the agency contacting you must be a real debt collector and not falsely portraying themselves as a collection agency to scam you out of your money.
Why do debt collectors engage in such shady tactics?
Because these scurrilous practices tend to scare a consumer into paying down debt. In their zeal to get the money, debt collectors might:
- Claim that they can have the police arrest you unless you make a payment
- Threaten to sue you
- Contact family members or neighbors
- Harass you over the phone by calling you repeatedly at dinnertime or contacting you at work when you cannot accept personal calls
Two Important Seventh Circuit Court Decisions Concerning the FDCPA
On February 15, 2022, JDSUPRA®.com published an article about two crucial Seventh Circuit Court decisions concerning the FDCPA and the bona fide error defense.
In Ewing v. MED-1 Solutions, LLC, the plaintiff sought to dispute a medical debt by faxing a letter to MED-1, a debt collector. MED-1’s receptionist misrouted the fax by forwarding it to the client care department rather than the legal department. MED-1’s fax distribution policy provided that any faxed legal communication regarding disputed debts should be forwarded to the legal department. The receptionist received on the same day and correctly forwarded, five other dispute letters. As a result of the plaintiff’s misdirected fax, her dispute was never recorded. Two years later, she obtained a copy of her credit report and saw that her debt as reported by MED-1 was not marked disputed.
She subsequently filed a lawsuit against MED-1 in which she alleged it had violated the FDCPA (15 U.S.C. Section 1692(e)(8)) by reporting her debt to a consumer reporting agency (CRA) without noting it had been disputed. Having admitted the underlying facts, MED-1 asserted that it was entitled to rely on the bona fide error defense because the failure to report the dispute arose from an unintentional error and it maintained procedures reasonably adapted to ensure that it reported faxed disputes. The district court granted summary judgment to MED-1 based on the bona fide error defense.
In Webster v. Receivables Performance Management, LLC, the plaintiff sought to dispute a debt she discovered on her credit report that she did not believe she owed. Her attorney faxed a dispute notice to Receivables, a debt collector, after verifying that the fax number (which he had used on behalf of other clients) remained listed with the Multistate Licensing System & Registry, the entity through which debt collectors are licensed in Indiana. Receivables had decided several months earlier to stop monitoring its fax inbox after removing the fax number from its website. Receivables had general policies for handling known disputes but no procedure to check the fax inbox periodically for new disputes or to notify senders that the inbox was unmonitored. As a result, Receivables was unaware of the plaintiff’s fax, but because it had not disabled the fax number, confirmations continued to be sent upon receipt of faxes, including to the plaintiff’s attorney.
After obtaining an updated credit report that showed her debt but not her dispute, the plaintiff filed a lawsuit against Receivables alleging a violation of FDCPA Section 1692(e)(8). Receivables claimed that even if it violated the FDCPA, the bona fide error defense excused its violation. The district court granted Receivables’ motion for summary judgment based on the bona fide error defense.
The Seventh Circuit found that MED-1 had implemented procedures reasonably adapted to avoid the error of a misdirected fax by including a step-by-step explanation in its written policies of how a receptionist should properly direct legal faxes. The court rejected the plaintiff’s argument that to have “reasonably adapted” procedures, MED-1 needed to have a policy requiring departments to identify and forward misdirected faxes. In the Seventh Circuit’s view, it was sufficient that the error that gave rise to the case would have been avoided if the step-by-step fax procedures had been followed.
With regard to Receivables, the Seventh Circuit found it did not have reasonably adapted procedures in place to avoid the error that occurred—not reporting a faxed dispute. According to the court, it was not reasonable for Receivables to stop monitoring its fax inbox while allowing the system to continue to send confirmations that faxes had been received. The court rejected Receivable’s attempt to rely on its “unspecified FDCPA training for employees and general policy of reporting disputes,” stating that “[r]egardless of these imprecise policies, Receivables had no reasonable policy in place to ensure that faxed disputes were reported. Nor did Receivables implement any reasonable procedure to ensure that it would no longer receive faxed disputes in the first place.”
Although one case favored the plaintiff (the debtor) and one the other, the defendant (the debt collector), both illustrate the importance of choosing an experienced and knowledgeable consumer debt attorney.
What to Do If A Debt Collector Has Sued You for A Debt
Has a debt collector already sued you? You still have options to resolve your debt. Expect to receive a copy of the court summons and the complaint, and do NOT ignore the lawsuit. Instead, seek the services of an experienced debt defense lawyer to ensure that the collector indeed has the legal right to pursue the debt. Suppose the statute of limitations has expired. In that case, the collector cannot take you to court. Explore your defense options, including debt resolution, with the help of an attorney experienced in debt collection defense, consumer protection, and bankruptcy.
How Do I Know If I’m Judgment Proof?
If you do not have enough assets in your name for a creditor to access, you are known as “judgment proof.” Creditors can track down anyone they believe has a real debt managed by their agency, but if you do not own any assets, there’s nothing they can liquidate or take to reconcile your debt. Thus, the creditor could win their legal case but won’t receive payment for the debt.
In most cases, an individual is only judgment proof when they own nothing and don’t have a job. However, owning nothing and being jobless is not a long-term situation; therefore, it does not protect you from the creditor forever. Remember, creditors’ judgments can last several years.
How Can Ciment Law Firm PLLC’s Proven 3-Step Process Help You?
The experienced attorneys at Ciment Law Firm, PLLC, a Katy, Texas Consumer Protection Firm, understand debtors’ tactics, the proper way to respond when harassed by a creditor, and the most appropriate ways to respond to a debt collector’s communication.
Our firm has created a 3-step proven process for debt and credit freedom with you and a fresh financial start in mind.
In Step 1, we resolve your debts. Depending on your unique circumstances, this could involve:
- Debt Lawsuit Defense
- Bankruptcy Protection
- Debt Protection Program
- Debt Assistance Program
- Bank Garnishment
- Student Loan Assistance
- Judgment Lien Release
In Step 2, we protect your rights.
- Fair Debt Collection Practices Act
- Texas Debt Collection Practices Act
- Telephone Consumer Protection Act
In Step 3, we rebuild your credit with 7 steps to a 720 Credit Score.
Learn more about each step and how our 3 Step Proven Process puts you on the path to financial stability.
Start Your Journey Toward Freedom from Debt with Ciment Law Firm, PLLC
As a debtor right now, you probably feel overwhelmed. You might believe there is no way out of the vicious debt cycle. We want to assure you that when you seek the support and guidance of our experienced consumer protection, debt collection defense, and bankruptcy attorneys, we will answer your questions and guide you on the path to debt freedom and a 720 credit score. Contact us to schedule your free consultation by filling out the form or calling us at (281) 937-3949.
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The information in this document is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.